Information about Solar Panels in Oklahoma

We’re not going to lie. Compared to other states, the prospects for OK Solar is fairly bleak. Actually, it’s really bleak. With large reserves of natural gas (which account for almost 50% of all electricity generation in the state) and cheap wind, coupled with little pro-solar regulations and no incentives, utilities and homeowners lack any real reason to install.

All that being said, if you have the right situation and take advantage of the 30% federal tax credit, you can not only save a little cash over the life of the installation, but you’ll be contributing to a cleaner environment! And that’s the whole point of solar right?

Below we’ve got all the information you need to decide whether going solar in Oklahoma is right for you, including savings estimates, information on solar policy, and details on available incentives (or at least, the available incentive).

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#1 Are Solar Panels Worth it in Oklahoma?

* Note that these are estimated values for informational purposes only, and do not take into account the full complexity of all financial projections. They also only apply to cash purchases, which means your numbers will be different if you lease your system or pay for it with a loan (factoring in interest). Also note that we are not financial advisors, so this information should not be construed as financial advice.

Oklahoma lacks most of the things that make going solar a great decision in other states. Oklahoma residents enjoy a lot of sunlight that is perfect for solar, but the state refuses to implement any real pro-solar policies. There are no local incentives available and electricity prices are extremely low.

All this means that saving money by going solar in Oklahoma is a difficult process. Because of all this, we sadly must give Oklahoma a D for solar.

#2 Options for Buying Solar Panels in Oklahoma

If you go solar in Oklahoma, your total savings is going to be quite low because of the state’s cheap electricity and lack of incentives, not to mention that there are absolutely no net metering benefits.

Cash Upfront

For any homeowner, going solar with cash upfront is always going to be your best bet. By paying the entire cost at the beginning, you avoid any interest or fees that cut into your savings and you can take advantage of the 30% federal tax credit as well. However, with cash, you have to foot the entire installation cost at the outset – not an easy task.

How much does it cost to go solar in Oklahoma? For an average-sized 5kW installation, it costs about $18,550. After applying the 30% federal tax credit, your total investment drops to $12,985.

Almost $13k is quite a lot, but over 25 years you can see a net savings of $7,758 with a payback of 17 years.

Before you get too excited, though, we have a very important caveat to these savings: this estimate is a ‘best of’ scenario. We’re assuming that, after you install your solar installation, you actually use 100% of the electricity you produce in your own home. Oklahoma lacks any sort of net metering incentives and this greatly affects your bottom line.

Without net metering, to receive the financial benefit of each unit of electricity (kilowatt-hour) your solar installation produces, you need to be at home to consume it. Otherwise, it just goes into the grid and you’re left with a kWh you paid for but didn’t get to use! If you use only 80% of the electricity your solar installation produces, your solar cost per kWh goes up and your savings go down to $6,200.

For more information on net metering in Oklahoma, jump down to the section below.

Leases

Leases and power purchase agreements (PPAs), collectively known as third-party ownership, is outright banned in Oklahoma. This is bad news for solar in the state.

While the popularity of leases and PPAs has been dropping in recent years, these financing mechanisms are what initially created the huge boom in solar’s popularity. They can be considered the backbone of solar financing. With leases and PPAs banned, large national installation companies are hesitant to begin working in the state, choosing instead states that are more solar-friendly.

Bottom Line: Only a handful of states currently ban leases or PPAs, including Oklahoma, Florida, Alabama, Arkansas, and West Virginia.

Loans

With solar loans, you get to reap the same rewards as a cash purchase – the higher savings and financial incentives – without that upfront cost. Obviously your savings are going to be lower, since you’ll be paying interest on the loan. However, if you don’t have the cash to fund that initial purchase price, loans offer a great way to go solar!

With the increasing popularity of solar, a lot of organizations now offer solar loans, including credit unions, banks, and dedicated solar loan companies. Be sure to check with your solar installer, as they’ll often have a preferred lender they’ve worked with before.

How much can you save by financing your Oklahoma solar installation with a loan? Financing the same 5kW installation above (that cost $12,985 after incentives) with a 15 year 5% interest loan means you’d spend a total of $20,840 after incentives. After 25 years, you’d actually lose about $100 – not something you really want to invest your money in.

Obviously, if you can find a loan with lower interest rates or shorter payback periods, you’d actually be able to save some money, so do your homework and shop around before deciding!

These savings, though, are subject to the same caveat as the cash purchase above. They don’t account for Oklahoma’s lack of net metering, so be sure to read the section below to further understand how this can affect your total savings.

Bottom Line: More ‘standard’ loans that save homeowners money in other states simply won’t work in Oklahoma. You’ll need to find short term loans with low interest.

#3 Oklahoma Solar Policy Information

While Oklahoma has adopted RPS goals and net metering – strong pieces of pro-solar policy – the actual regulations are essentially gutted of all their power.

Renewable Portfolio Standard

States that want to encourage adoption of renewable energy often pass renewable portfolio standards (RPS), which are goals that a certain percentage of all the electricity sold in the state must come from renewable energy sources.

Currently, 29 states have adopted RPS goals, with the most aggressive states setting very high standards. Hawaii, for example, mandated that 100% of all electricity must be renewable by 2045. California must be 50% renewable by 2030.

In 2010, Oklahoma adopted a Renewable Portfolio Standard that by 2015 15% of all electricity must come from renewable sources, which included solar, wind, hydro, hydrogen, geothermal, biomass, and distributed generation (in other words, residential roof-top solar).

Unfortunately, there’s one big catch, though: Oklahoma’s RPS is purely voluntary. The state doesn’t punish or fine utilities if they don’t comply.

Even still, according to the state’s 2016 RPS report, Oklahoma utilities blew the mandate out of the water, sourcing 25.9% of all their electricity from renewable sources, almost exclusively from wind power (no surprise there, as wind power is cheap and Oklahoma’s the perfect place for it).

Oklahoma is actually already ahead of the curve on renewable energy, beating many other states. However, it’s almost all large-scale wind power. If they really want to help their residents save money and electricity, they should consider adopting another RPS stating that solar (and even specifically residential solar) must make up a certain percentage.

Electricity Prices

Oklahoma has some of the lowest electricity prices in the country. At $0.10 per kWh, it’s over 20% lower than the US average of $0.13 per kWh. Oklahoma has huge reserves of natural gas, which powers 46% of all the state’s electricity (compared to 33% for the US as a whole), so it’s understandable their fuel prices remain fairly low.

Low electricity prices are a great thing, but with solar it means you can’t save as much money by ditching the utility and producing your own electricity. In California, the Northeast, and Hawaii, where electricity prices are sky-high, saving money by going solar is pretty easy. Not so in Oklahoma.

Net Metering

Net metering is somewhat of a sad affair in Oklahoma. Back in 1988, the state passed a law that small electricity generators (ie, you with solar on your roof) are allowed to connect to the grid and pump power into it. A great first step!

However, unlike net metering in most other states, utilities aren’t required to actually pay for this electricity – you hand it over to them for free!

At the risk of being overly dramatic: this is a huge deal. Not having proper net metering it place means you can’t take full advantage of all the electricity your installation produces.

Think about it: The sun is highest in the sky around noon (let’s say 10 AM to 2 PM). This is naturally when your solar installation is producing the most electricity. However, are you and your family at home during this time? No! You and your spouse are at work and your kids are at school.

Of course, appliances like your fridge and AC are on and running off your solar energy, but your panels are likely producing more electricity than your home is using. At this point, all that excess electricity goes into the grid to be used elsewhere.

If you lived in a state that provides compensation for your excess electricity, you’d be hunky-dory. Your utility would credit your account (either in kWh or dollars) for any electricity you pumped into the grid. You could use those credits at night when everyone is home but your solar panels aren’t producing electricity.

In Oklahoma, and any other state without net metering, you aren’t compensated for all the excess electricity you send into the grid. In essence, you’re just dumping your electricity (and financial investment) down the drain – never to be seen (or benefited from, at least financially) again.

This might sound bleak, and frankly, it is. Without net metering, you’re not going to see nearly the return on your investment as you would otherwise. It’s simply a question of “How much of my solar electricity can I use the moment it’s created?”

If you absolutely never leave your home, it’s probably 100%, and therefore a sound financial investment. If you’re not an extreme homebody, though, you’re only going to be able to use a percentage of your solar electricity each day–meaning you’re not going to financially benefit from your investment as much as you could be.

Tack on the monthly fixed bill that Oklahoma utilities are allowed to charge grid-connected solar customers and your savings drop even further.

Interconnection Rules

Most states that are serious about encouraging the growth of solar pass regulations that standardize the approval process to connect your installation to the utility grid, known as the interconnection process. In these states, small residential solar installations (10kW or smaller) are usually eligible for fast-track status, meaning the only requirement is typically an application to be submitted.

When an interconnection is fast-tracked, there are usually minimal fees, no in-depth studies by the utility on how your installation could affect the grid, and few additional requirements. And because these regulations are passed by the state government, the approval process is standard for almost all utilities working in the state.

Oklahoma, unfortunately, has yet to pass any standardized interconnection process. This means that the actual process and requirements, as well as fees, will differ from one utility to the next. Our best advice is to call up your local utility and discuss with them directly or talk to your solar installer to hear their own experience with this process.

Homeowners Associations

Oklahoma has no laws protecting residential solar access. This leaves homeowners subject to cantankerous HOAs that want to block solar, neighbors who plant trees, and developers that could build structures that block sunlight.

Many states have passed laws protecting these solar rights, barring HOAs or other covenants from banning solar and providing legal protection for sunlight access for solar homeowners.

If you go solar in Oklahoma, know the risks involved and understand that you have little legal recourse if your neighbor plants trees that shade your panels. Your best bet is a good relationship with your neighborhood and to let your neighbors know your solar plans before taking any other steps.

#4 Financial Incentives, Rebates, and Tax Credits

Federal Tax Credit

Any homeowner who purchases and installs a solar installation in the US is eligible for the 30% federal tax credit. As a tax credit – not just a deduction – it’s equal to a dollar-for-dollar 30% discount on your total cost to go solar.

The tax credit originally was supposed to expire in 2016, but the federal government passed a bill to extend the credit until 2019, when it drops to 26% until 2021, and then 22% until 2022. After 2022, the tax credit is officially toast.

Since it’s a tax credit, you file for this incentive yourself at tax time; you won’t see the savings immediately when you install, but know that they are coming!

Utility Based Incentives

At this time, there are no utility-based incentives available for Oklahoma residents.

Property Tax Exemption

Oklahoma offers no property tax exemption for solar installations. While these typically work out to only around $100 in savings the first year, they are more a symbol that the state is actively looking for varied ways to encourage solar in their area.

Sales Tax Exemption

Many states exempt solar equipment and installations from sales tax, including New Mexico, Minnesota, and Vermont. Oklahoma offers no sales tax exemption for solar installations. With a state sales tax of 4.5%, this could have meant a savings of $830. No small potatoes!

General Increase in Home Value

Purchasing and installing solar adds some serious value to your home, according to a 2015 study by the Lawrence Berkeley National Laboratory (LBNL) of home values in 6 different states (though not including Oklahoma). Researchers found that home buyers are willing to pay an average of $4.51 per watt for solar installations. This adds up to over $20k for a normal sized 5kW installation.

The story isn’t so bright with solar leases and PPAs. A separate study by LBNL found that leased solar doesn’t add or subtract from a home’s value or time on the market. As leases and PPAs aren’t allowed in Oklahoma, this isn’t too much of an issue!

If you’d like to dig even more on local incentives and rebates, check out the DSIRE database.

What to Do Next?

Installing solar in Oklahoma can save you money in the long run, but the margin for savings is pretty narrow. Without incentives, net metering, or other pro-solar policies, the solar industry will remain stuck in first gear, unable to really build up any steam.

If you do decide to go solar, be sure to talk to numerous installers and investigate any financing and incentive options that allow you to save as much money as possible.